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President Trump signs federal funding package

President Donald J. Trump signed a federal funding package on Dec.20, 2019, which included three of PIA Northeast’s top federal policy priorities.

The measure includes an extension of the National Flood Insurance Program until September 30, 2020; an extension of the Terrorism Risk Insurance Program (commonly referred to as TRIA) through the end of 2027; and the permanent repeal of the healthcare Cadillac Tax . The vote in the Senate was 71-23. The House passed the legislation earlier in the month by a vote of 297-120.

The extension of the NFIP marks the 15th time the president has signed a short-term reauthorization of the program since September 2017, when the five-year extension of the program expired.

While there are multiple bills floating around Congress that would extend the NFIP long term, and make signification changes to the program, this extension does not include any major changes. The hope is that this nine-month extension (compared to much shorter extensions in the past) will give Congress time to work on a long-term reauthorization bill that addresses inherent problems with the program that have led to the NFIP owing the U.S. Treasury more than $20 billion.

The NFIP has been mired in short-term extension purgatory for years, but the opposite is true of TRIA. TRIA was set to expire at the end of 2020, but was extended for a period of seven years. Prior to the signing of the federal funding package, legislation to reauthorize TRIA long term had moved through the House and Senate with startling speed and no controversy.

The program was created in the aftermath of the September 11 terrorist acts to encourage private insurance carriers to offer terrorism coverage. TRIA has allowed businesses throughout the country to obtain coverage for the risk of a terrorist attack. It functions as reinsurance for insurers that agree to provide terrorism coverage to businesses. Unlike other government-run insurance programs, TRIA does not pay claims directly to policyholders. TRIA acts as a reinsurer, reimbursing insurers, under certain circumstances, for the terrorism claims they have paid.

TRIA has required criteria to qualify for the coverage and most licensed commercial property/casualty insurers meet these standards. TRIA does not provide complete reinsurance for terrorism. Insurers have a co-pay, which is set to rise to 20% in 2020. Although authorized to cover up to $100 billion annually in claims, TRIA has never been tested and has not yet paid out any claim. The main objective of TRIA is to assure lenders and insurers of coverage in the event of an attack.

The Cadillac tax, which is an excise tax on high cost employer sponsored health plans, was a part of the Patient Protection and Affordable Care Act (ACA). The tax would have applied to health plans with costs in excess of $10,200 for individual plans and $27,500 for family. Employers who offered these plans would have been required to pay a 40% tax for each employee with a plan that exceeded the statutory threshold. The tax was originally supposed to go into effect in 2018, but was delayed multiple times and was set to go into effect in 2022 prior to its elimination in this funding measure.

PIA Northeast thanks congressional leadership and President Trump for hearing the voices of independent insurance agents throughout this process.